Core Viewpoint - Oaktree Specialty Lending Corporation (NASDAQ: OCSL) is rated as a Hold for income-focused investors interested in business development companies (BDCs) [1] Group 1: Company Performance - The stock price of Oaktree Specialty Lending Corporation has decreased by 19.92% over the past 12 months [1] - This decline has resulted in a relatively high annual yield of 11.25% [1] Group 2: Analyst Background - David A. Johnson, the founder and principal of Endurance Capital Management, has over 30 years of investment experience and holds multiple advanced degrees in finance and business [1]

11:00 a.m. Eastern Time / 8:00 a.m. Pacific TimeLOS ANGELES, CA, July 02, 2025 (GLOBE NEWSWIRE) -- Oaktree Specialty Lending Corporation (NASDAQ:OCSL) (“Oaktree Specialty Lending” or the “Company”) today announced that it will report its financial results for the third fiscal quarter ended June 30, 2025 before the opening of the Nasdaq Global Select Market on Tuesday, August 5, 2025. Management will host a conference call to discuss the results on the same day at 11:00 a.m. Eastern Time / 8:00 a.m. Pacific ...

Group 1 - The article expresses skepticism regarding the near- to medium-term return prospects for business development companies (BDCs) due to lower base rates, higher long-term yields, shallow leveraged buyout (LBO) and merger & acquisition (M&A) volumes, and an increasing supply of new private credit [1] Group 2 - Roberts Berzins has over a decade of experience in financial management, focusing on helping top-tier corporates shape financial strategies and execute large-scale financings [1] - Berzins has contributed to institutionalizing the Real Estate Investment Trust (REIT) framework in Latvia to enhance the liquidity of pan-Baltic capital markets [1] - His policy-level work includes developing national State-Owned Enterprise (SOE) financing guidelines and frameworks for channeling private capital into affordable housing [1]

Group 1 - Oaktree Specialty Lending (NASDAQ: OCSL) is currently trading at a 16% discount from its net asset value, indicating potential for price recovery [1] - The company has a catalyst in its portfolio related to credit performance, which may enhance its rebound prospects in 2025 [1] - Oaktree Specialty Lending has recently cut its dividend, which may impact investor sentiment [1]

Core Insights - The article emphasizes the importance of dividend investing in quality blue-chip stocks, BDCs, and REITs for building a sustainable retirement income [1][2]. Group 1: Investment Strategy - The company focuses on a buy-and-hold investment strategy, prioritizing quality over quantity in its portfolio [1]. - The goal is to help lower and middle-class workers build investment portfolios that consist of high-quality, dividend-paying companies [1]. Group 2: Personal Investment Philosophy - The company aims to achieve financial independence through dividend income within the next 5-7 years [1]. - There is a strong emphasis on educating investors to conduct their own due diligence before making investment decisions [1].

Financial Data and Key Metrics Changes - Adjusted net investment income decreased to $39 million or $0.45 per share from $45 million or $0.54 per share in the previous quarter [5][22] - Net asset value declined to $16.75 per share from $17.63 in the prior quarter [5] - Investments on non-accrual status increased to 4.67% of fair market value and cost, compared to 3.95% in the first quarter [6] Business Line Data and Key Metrics Changes - The company committed $407 million of capital across 32 investments, compared to 13 investments totaling $198 million in the previous quarter [15] - The weighted average yield on new debt investments was 9.5%, slightly down from 9.6% in the prior quarter [16] - The portfolio's weighted average interest coverage declined to 1.8 times from 2.1 times in the previous quarter [17] Market Data and Key Metrics Changes - The median EBITDA of portfolio companies increased to approximately $158 million, up $16 million from the prior quarter [17] - The leverage in portfolio companies remained steady at 5.4 times, below overall middle market leverage levels [17] Company Strategy and Development Direction - The company is focusing on larger, more diversified businesses that can withstand uncertain times, emphasizing investments at the top of the capital structure [16][28] - The company is actively managing non-accrual investments and has taken steps to align interests with shareholders, including amending the incentive fee structure and purchasing shares [10][27] Management's Comments on Operating Environment and Future Outlook - The management noted significant uncertainty in the trade environment due to potential new tariffs and their impact on portfolio performance [28] - There is a cautious outlook on M&A activity, with expectations that many lenders will be more conservative in capital deployment [28] - The company believes it is well-positioned to navigate the current market environment and deliver attractive risk-adjusted returns to shareholders [29] Other Important Information - The company successfully issued new unsecured bonds to refinance existing bonds and amended its senior secured revolving credit facility, reducing interest rates [9][24] - The joint ventures currently hold $440 million of investments, generating attractive annualized ROEs of approximately 10.6% [25] Q&A Session Summary Question: Did the company lean into any liquid markets, structured finance, or syndicated loans in April? - The company was somewhat active but remained cautious due to unresolved tariff situations, experiencing a sell-off in high yield bonds and senior loans [32][33] Question: How successfully has the company been focusing on larger and diversified businesses? - The market conditions have been challenging, but there is a return of larger borrowers into the direct lending market, improving the pipeline for issuing direct loans [36][39] Question: What is the expected run rate for net investment income given the markdowns and changes in non-accruals? - The company is focused on working through non-accrual situations and expects repayments to remain significant despite market volatility [46][52] Question: Is the yield reflective of what the portfolio should generate going forward? - The decline in yield is attributed to reference rate declines and new non-accruals, but the current yield is considered a decent run rate [58][59] Question: What is the expected ROE for the joint ventures over time? - The company aims to achieve an ROE in the 11% to 12% range, depending on the opportunities available [62]

Oaktree Specialty Lending (OCSL) Q2 2025 Earnings Call May 01, 2025 11:00 AM ET Company Participants Clark Koury - Head - IRMatt Pendo - PresidentArmen Panossian - CEO & Co-CIOChristopher McKown - CFO & TreasurerMelissa Wedel - Vice President, U.S. Equities ResearchPaul Johnson - Vice President Conference Call Participants Finian O’Shea - Analyst Operator Welcome, and thank you for joining Oaktree Specialty Lending Corporation Second Fiscal Quarter twenty twenty five Conference Call. Today's conference call ...

Financial Data and Key Metrics Changes - Adjusted net investment income decreased to $39 million or $0.45 per share from $45 million or $0.54 per share in the previous quarter [5] - Net asset value declined to $16.75 per share from $17.63 in the prior quarter [5] - Investments on non-accrual status increased to 4.67% of fair market value and cost, compared to 3.95% in the first quarter [6] Business Line Data and Key Metrics Changes - The company committed $407 million of capital across 32 investments, compared to 13 investments totaling $198 million in the previous quarter [15] - The weighted average yield on new debt investments was 9.5%, slightly down from 9.6% in the prior quarter [16] - The median EBITDA of portfolio companies increased to approximately $158 million, up $16 million from the prior quarter [16] Market Data and Key Metrics Changes - The leverage in portfolio companies remained steady at 5.4 times, below overall middle market leverage levels [16] - The portfolio's weighted average interest coverage declined to 1.8 times from 2.1 times in the previous quarter [16] - The joint ventures generated an attractive annualized ROE of approximately 10.6% [24] Company Strategy and Development Direction - The company is focusing on larger, more diversified businesses that can withstand uncertain times [16] - There is a heightened focus on underwriting and risk evaluation due to potential impacts from tariffs and inflation [28] - The company is actively seeking opportunities in capital solutions or rescue financing during periods of market volatility [28] Management's Comments on Operating Environment and Future Outlook - The management noted significant uncertainty surrounding the trade environment and its potential impact on portfolio performance [27] - There is an expectation of cautious capital deployment among lenders due to the current economic outlook [28] - The company believes it is well-positioned to navigate the current market environment and deliver attractive risk-adjusted returns to shareholders [29] Other Important Information - The company successfully issued new unsecured bonds to refinance existing bonds and amended its senior secured revolving credit facility, reducing interest rates [8] - The company has ample liquidity of approximately $1.1 billion, including $98 million in cash and $1 billion in undrawn capacity on credit facilities [23] Q&A Session Summary Question: Did the company lean into any liquid markets, structured finance, or syndicated loans in April? - The company was somewhat active but remained cautious due to unresolved tariff situations [32] Question: How successfully has the company been focusing on larger and diversified businesses? - The company noted that while larger borrowers were initially seeking better pricing in the broadly syndicated loan market, there has been a return of larger borrowers to the direct lending market [34][38] Question: Should the company expect any slowing of repayment activity during this period of volatility? - The management anticipates that repayments will remain significant but acknowledges that volatility may lead to a slowdown in the future [52] Question: Is the current yield reflective of what the portfolio should generate going forward? - The management indicated that the current yield is a decent run rate, influenced by reference rate declines and new non-accruals [59] Question: What is the expected ROE for the joint ventures over time? - The management believes achieving an ROE in the 11% to 12% range is achievable, depending on the opportunity set [62]

Company Performance - Oaktree Specialty Lending (OCSL) reported quarterly earnings of $0.45 per share, missing the Zacks Consensus Estimate of $0.51 per share, and down from $0.56 per share a year ago, representing an earnings surprise of -11.76% [1] - The company posted revenues of $77.57 million for the quarter ended March 2025, missing the Zacks Consensus Estimate by 6.81%, and down from year-ago revenues of $94.03 million [2] - Oaktree Specialty Lending has not surpassed consensus EPS or revenue estimates over the last four quarters [2] Stock Performance - Oaktree Specialty Lending shares have declined approximately 5.8% since the beginning of the year, compared to a decline of -5.3% for the S&P 500 [3] - The stock currently holds a Zacks Rank 4 (Sell), indicating expectations of underperformance in the near future [6] Future Outlook - The current consensus EPS estimate for the coming quarter is $0.48 on revenues of $84.26 million, and for the current fiscal year, it is $2 on revenues of $339.55 million [7] - The estimate revisions trend for Oaktree Specialty Lending is currently unfavorable, which may impact future stock movements [6] Industry Context - The Financial - Miscellaneous Services industry, to which Oaktree Specialty Lending belongs, is currently in the top 37% of over 250 Zacks industries, suggesting a favorable industry outlook [8]

Financial Performance - Adjusted Net Investment Income and GAAP Net Investment Income were both $045 per share, compared to $054 per share in the previous quarter[9] - Net Asset Value per share decreased to $1675, down from $1763 as of December 31, 2024, primarily due to write-downs on certain debt and equity investments[9] - A quarterly cash distribution of $040 per share and a supplemental cash distribution of $002 per share were declared[9] Portfolio Composition and Investment Activity - Total investments at fair value amounted to $29 billion across 152 portfolio companies[9, 11] - New investment commitments totaled $407 million with a weighted average yield of 95% on new debt investments[9, 17] - $406 million was funded in new investments, while $279 million was received from prepayments, exits, other paydowns, and sales[9] - The portfolio is composed of 84% senior secured debt investments, including 81% first lien loans, and 90% of the debt portfolio is floating rate[9] Capital Structure and Liquidity - The company has $98 million in cash and $104 billion of undrawn capacity on credit facilities[9] - The existing revolving credit facility was repriced, extending the maturity by approximately 2 years and reducing pricing by 125 bps[9] - The company refinanced its 2025 notes with $300 million of unsecured notes due in 2030, priced at 634% (SOFR+219%)[9] Strategic Actions - Oaktree purchased $100 million of newly issued shares of OCSL common stock at a price of $1763/share[7] - An incentive fee cap was instituted, resulting in a waiver of $67 million of Part I incentive fees in the second fiscal quarter of 2025[7]